For the second year in a row, the Atlantic Region received about $100 million in venture capital investment, largely because of a handful of big deals in Nova Scotia, according to data from Canada’s Venture Capital and Private Equity Association.
The CVCA, as it’s known, released its data for 2017 this week, showing that Nova Scotia, New Brunswick, and Newfoundland and Labrador accounted for 58 VC deals worth a total of $99 million. That’s a slight drop in dollar value from 2016, when the CVCA said the region received $103 million in VC investment in 56 deals.
The Atlantic Canadian data is contained in a report on venture capital and private equity investment for the country overall, which shows a steady increase in VC investment.
“Canadian venture capital investment grew 11 per cent in 2017 with $3.5 billion invested over 592 deals compared to the $3.2 billion invested over 534 deals in 2016,” said the report. “This is the latest increase, following years of steady investment growth for Canadian VC across the entire spectrum of stages in the ecosystem. Canadian venture capital investment is now approximately double the size it was just five years ago.”
The growth in Canadian VC totals is being driven by major investments, as there were a record 15 deals worth more than $50 million each in Canada last year, up from 10 the year before. There were three $100-million-plus deals, led by Montreal-based Lightspeed POS Inc. raising a record $207 million.
The $50-million-plus deals are a gravy train that has yet to travel east of Gaspe Bay, as no Atlantic Canadian company has ever booked a VC round of more than $20 million. But Nova Scotia has been booking larger deals than it ever has before.
The CVCA’s databank shows that Nova Scotia startups raised a total of $77 million in 21 deals in 2017, for an average deal size of $3.7 million. (By comparison, the average deal size in Canada last year was $5.9 million.) In 2016, according to CVCA data, the average Nova Scotian funding round was $2.9 million.
The average deal size is important because companies that can raise large rounds tend to have the greatest impact. They hire more people, spend more on R&D, export more and fail less often.
The funding in Nova Scotia was led by such deals as Halifax-based Manifold raising US$15 million; Halifax’s Affinio raising US$9 million; Metamaterial Technologies Inc. of Halifax booking an $8.3 million funding round; ABK Biomedical closing a $9 million round in August; and Liverpool-based Aqualitis’ $8.8 million round.
New Brunswick accounted for 30 deals worth a total of $16 million. The CVCA said 27 of those funding rounds, worth a total of $15 million, included participation by the New Brunswick Innovation Foundation. The report said the NBIF (which is a non-profit organization that receives government funding) was the second-most active “government fund” in the country, exceeded only by the federal government’s BDC Capital.
Nova Scotia’s Innovacorp, a provincial Crown corporation, was involved in 13 deals worth $24 million.
The report said there were seven deals in Newfoundland and Labrador in 2017 worth $6 million, and that there was no venture capital funding on Prince Edward Island last year. The recently launched Island Capital Fund has already announced three deals this year, but they were its first investments.
Disclosure: NBIF and Innovacorp are clients of Entrevestor.